This invention relates generally to pension plans, and more specifically, to a self-implementing pension benefits system utilizing life insurance as a major vehicle for funding benefits.
Several Congressional acts since 1974 including ERISA and TEFRA have led the way in a Congressional attempt to stem the tide of underfunded or illusory pension benefits in the past. To a large extent, these Congressional efforts coupled with other judicial pronouncements have contributed to the demise rather than strengthening of many of these prior pension programs and have compelled drastic changes in those that remain. Several economic and social factors including inflation, longer life expectancies, higher interest rates, recession, bankruptcies and other economic factors have all taken heavy tolls on private pension plans.
More recently, many private pension plans which had moved to adopt defined benefits pension plans are now being forced to either amend or dissolve their programs, resulting in loss by employees of considerable unvested benefits and creating a new movement toward defined contributions programs which are completely open ended concerning levels of benefits and protection of future purchasing power.
The present system, while fully complying with all of the latest Congressional and judicial mandates, provides a novel fully funded pension benefits system which imposes considerably lower and fixed determinable financial burdens upon each subscriber employee who may be an individual below retirement age, whether employed or not, and relieves him of all administrative and fiduciary responsibility, while also providing expanded, accurately predictable, and increasing benefits to all such enrolled employees. Benefits are expanded in that, in addition to periodic retirement payments after retirement age e.g., 65, both death and disability benefits are also provided. Rather than being fixed or completely undeterminable, all benefits provided by the present system are projectable from the onset of a program so that each subscriber employee may determine his or her future benefits resulting from death, disability, or retirement and be assured that because of a built-in increasing benefits, that the benefits he or she receives will keep pace with inflation, retaining his purchasing power. The marvels of this new self-implementing pension system are, in large part, achieved by a unique implementation of life insurance to fund future payable liabilities by a lending institution utilizing principles of reverse annuity also in a unique way. Rather than terminating life insurance at employee retirement, each policy is maintained in force by the life insurer until the employee's death, the proceeds flowing to the lending institution chosen to assist in funding the reverse annuity and the associated periodic benefits.